Bit By Bit: An Analysis of the Role of Bilateral Investment Treaties on China’s Investment in Latin America

Forgette, Matthew
(2018)
Bit By Bit: An Analysis of the Role of Bilateral Investment Treaties on China’s Investment in Latin America.
Undergraduate thesis,
under the direction of Timothy Nordstrom from
Political Science,
The University of Mississippi.

Abstract

Over the past 15 years, the political and economic relationship between China and Latin America has progressed rapidly. Chinese investment in Latin America has risen to unprecedented levels, and numerous Latin American leaders have praised and welcomed China’s growing influence in the region. A key component of this burgeoning relationship has been the emergence of bilateral investment treaties between China and Latin American nations. Over the past 30 years, China has signed a bilateral investment treaty with 12 different Latin American countries. In light of their increasing importance, this paper seeks to analyze the role of bilateral investment treaties in the Sino-Latin America relationship. Through both quantitative and qualitative analysis, this paper examines what factors motivate China and Latin American countries to sign bilateral investment treaties and also analyzes whether these agreements are useful tools for encouraging investment. The quantitative section of this paper establishes that factors traditionally recognized as motivations for Chinese investment in Latin America do not have a significant effect on signing a bilateral trade agreement. The qualitative section addresses and further examines this surprising finding, both by comparing Chinese investment in two different countries and analyzing the treaties themselves. Overall, the paper finds that normal motivations for Chinese investment in Latin America do not apply to the signing of bilateral investment treaties. Furthermore, the findings challenge the prevailing assumption that bilateral treaties stimulate foreign direct investment, at least in the context of the Sino-Latin American relationship.